Money for Piketon plant proves elusive

Sunday

May 20, 2012 at 12:01 AMMay 20, 2012 at 10:40 AM

WASHINGTON - For a moment last week, it appeared as if USEC, the Maryland-based company that wants to launch a uranium enrichment plant in southern Ohio, was one dead dog and a runaway wife from being a sad country song.

Jessica Wehrman, The Columbus Dispatch

WASHINGTON — For a moment last week, it appeared as if USEC, the Maryland-based company that wants to launch a uranium enrichment plant in southern Ohio, was one dead dog and a runaway wife from being a sad country song.

But, with the long-struggling project, nothing is ever clear-cut.On Friday, the U.S. House overwhelmingly agreed to keep $150 million in research and development money for the plant in a defense-spending bill, leaving alive hopes that the company might commercialize its technology and secure a $2 billion federal loan guarantee to fully operate the proposed American Centrifuge Plant in Piketon, Ohio.

The rub is this: The money in the bill that passed Friday is for fiscal year 2013, which begins in October. USEC says it needs the $150 million for the current fiscal year by June?1 or a key credit line will expire and the Piketon plant could shut down.

Earlier this year, the Senate passed a highway bill that included $150 million for this fiscal year for the Piketon plant. That bill is now in final negotiations with the House. USEC officials hope that because the House and Senate have both approved some form of funding for the Piketon plant, the Department of Energy will go ahead and approve the $150 million for this year through administrative action.

“I think Congress has spoken quite clearly right now about the issue,” said Paul Jacobson, a spokesman for USEC. “And it’s our view that this should provide significant strength to the argument that an administrative solution should be found for funding the balance of fiscal 2012 work.”

The House vote came during the same week that the company received two pieces of gloomy financial news. First, it was informed that its stock price had dropped so low that it was in danger of being de-listed on the New York Stock Exchange. Then, Standard & Poor’s threatened to downgrade its credit rating, calling its liquidity “weak,” and citing the uncertainty of the federal dollars as a reason for the potential downgrade.

Jacobson said the company received the news because the federal government had failed to act. “ It’s like being shot in the foot and told you can’t run the race,” he said.

Company officials and supporters of the project say the country has little choice but to support USEC. America, they say, needs to have a U.S.-owned producer of enriched uranium for national security purposes. Without it, they say, the country will rely on foreign countries for the uranium that fuels its nuclear power plants.

For years, the enriched uranium came from the USEC-operated Paducah Gaseous Diffusion Plant in Paducah, Ky. But that technology is expensive and outdated, and USEC says that the American Centrifuge Plant will eventually replace the Paducah plant. This week, however, USEC entered into an agreement with the Department of Energy to keep the Paducah plant open for at least another year, presumably to buy time for the Piketon plant to get its technology ready.

“The American Centrifuge Project is the only long-term option available to us that will fulfill national security requirements,” said Sen. Rob Portman, R-Ohio, a vocal supporter of the project.

Jacobson called the House vote and the Paducah agreement “significant wins” for a company that has faced “rough seas.”

The $150 million is a small piece of what the company ultimately will need from the federal government: USEC three years ago applied for a $2 billion federal loan guarantee. The Obama administration has yet to approve that loan guarantee, instead dangling the prospect of the $150 million for research and development at the plant to get the technology ready for commercialization. The administration has cited both technological and financial concerns as reasons for not approving the loan application.

Still, the $150 million is far from a reality, particularly given that the divided Congress has been able to agree on little this year.

Supporters of the Piketon plant have tried to attach a minimum of $100 million in research and development dollars — for both this year and next — to no fewer than four bills this year, including the defense bill.

“They’re sticking it on any vehicle they can, whether it makes sense for it to be on that or not,” said Autumn Hanna, senior program director for Taxpayers for Common Sense, a watchdog group critical of the proposal.

U.S. Reps. Ed Markey, D-Mass. and Steve Pearce, R-N.M. introduced the amendment last week to strip the $150 million from the defense bill. Pearce’s district includes a uranium-enrichment plant operated by the European-run URENCO.

Pearce’s chief of staff, Todd Willens, said the federal government should not subsidize a company in such dire financial straits.

“They’re playing the congressional lottery,” he said, “and hoping they can win it.”